Texans voted overwhelmingly on Tuesday to approve Proposition 7, a $10 billion measure that will create a state energy fund and incentivize new natural gas production in an effort to build out the state's grid capacity and protect against future blackouts.

The $10 billion energy-focused initiative was one of the 14 initiatives on the ballot on Tuesday and is meant to bolster the state’s aging power grid, primarily through investing in new natural gas-fired generation.

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Proposition 7 s meant to build out 10 megawatts of natural gas plants in the state, enough to power roughly 2 million homes.

Under the program, qualifying developers will be eligible for a 3% interest rate loan from the state to build out thermal energy plants. Additional state subsidies created by the measure cover up to 10% of their project costs, so long as the plants are built in compliance with certain state deadlines.

The loan distribution will be overseen by the Texas Public Utility Commission, making it the preferred lender for gas power developers in the state and allowing the body to operate like a bank.

It also invests a smaller $1.8 billion for the creation of microgrids, or small-scale “backup” power programs that would keep the lights on for systems serving critical facilities, such as hospitals, schools, and fire stations, in the event of a supply shortage.

Supporters praised Proposition 7 as a way to guarantee more dispatchable gas generation and firm up the aging Texas power grid, something that took on critical importance in the more than two years since Winter Storm Uri, the 2021 storm that caused 4.5 million residents to lose power and resulted in 246 deaths.

But Proposition 7 also sparked sharp criticism from environmentalists, consumer groups, and some energy analysts in Texas, who described it as a “giveaway” to natural gas developers and an investment that comes at the expense of more energy-efficient alternatives in the state, such as battery storage.

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Others still argued that the Texas Public Utility Commission, the state utility tasked with overseeing the loan program, is ill-prepared to act in the capacity of a major lender responsible for allocating billions of dollars in loans and subsidies or to gauge risk for default on these massive, taxpayer-funded investments.

“If you think about large lending institutions, they have significant teams of people who are working through analyzing loan applications, addressing the potential for default,” Michael Jewell, an attorney and advisory board member for the Conservative Texans for Energy Innovation, told the Washington Examiner in an interview.